Britain's biggest business groups are putting pressure on the government to row back on its latest tax proposals ahead of the Conservative party conference in Manchester this weekend.
In formal submissions sent to the government today, the Confederation of British Industry (CBI), EEF, British Chambers of Commerce (BCC) and Institute of Directors (IoD) have all warned chancellor of the exchequer George Osborne over the proposed new “apprenticeship levy”.
Osborne first recommended an apprenticeship levy in his Summer Budget in July, saying that the government would impose a new tax on larger companies, with money raised going into a fund to pay for training schemes at other firms.
CBI deputy director-general Katja Hall said there was a “high risk” the levy could “undermine the [apprenticeship] system, not strengthen it”.
“A new levy won’t be welcomed by business, so we want to see a new politically independent levy board setting the rate based on clear evidence with the funds ringfenced,” she added.
Osborne has yet to lay out at what rate the tax would be collected, or which firms would be affected.
The EEF said that industry was “highly sceptical” of the proposed levy, with the organisation’s head of employment and skills policy Tim Thomas saying: “Companies have serious concerns as to how the scheme will work in practice and perceive it is simply a tax on business which will do little to improve the quality and quantity of apprentices we urgently need.”
In its submission, the BCC said it did not support the proposal because there is a “significant risk” it would “lead to a focus on compliance rather than voluntary adoption and promotion of apprenticeship training”.
The submissions come on the same day as a new survey from the Chartered Institute of Personnel and Development (CIPD), showing that while 39 per cent of employers would be in favour of the levy “in principle”, 31 per cent would be opposed, with another 30 per cent undecided.
Almost a third said the levy would cause them to cut down on investment in other areas of workforce training and development.
Meanwhile, the IoD – which said in its own submission that its members were “cautious” about the apprenticeship levy because “historically, of the money raised via levies, large proportions have been spent on the bureaucratic costs of administration for those levies rather than spending it directly on the apprenticeship training they are supposed to be providing” – piled on even more pressure for the government to rethink its tax approach by pushing for drastic changes to inheritance and capital gains taxes (CGT).
In a new paper out today, the IoD’s head of taxation, Stephen Herring, criticised Osborne’s recent proposals for “main residence exemptions” as “painfully complex” and instead urged the chancellor to merge inheritance tax and CGT by repealing inheritance tax while introducing a new CGT on assets passed on at death.